Raising the stakes: How MBLs are providing marginal gains for operators

Ever since the Australian state of Victoria introduced minimum bet liability (MBL) laws back in 2016, a small but very vocal cohort of UK punters have been clamouring for similar rules to be put in place in the UK.

It’s a very complex issue, with clear grievances on both sides. In a recent op-ed for EGR, the founder of Justice for Punters, Brian Chappell, argued that “all conventional punters who win or who display skills suggesting they may win are getting caught in the cross-fire. [Bookies] have taken advantage of betting laws in the UK and around the world to eradicate all skilled conventional punters and nearly all risk.” And while that kind of policy can deliver strong, stable margins, it also comes with terrible PR, and arguably eliminates the aspiration side of punting which drives many punters.

Bookmakers in turn would argue they have no incentive to provide a living to professional punters, while the Australian market is very different, where Betfair has less influence, arbers and bots are less prevalent and multi-accounting is less common. And thus far at least, the regulators are on the bookies’ side.

UK Gambling Commission CEO Neil McArthur told EGR recently minimum bet laws were not a priority and that consumers had no “right to bet” under current gambling legislation.

McArthur added: “Our concern is making sure consumers are being treated fairly. We have some sympathy with the idea these restrictions apply asymmetrically for instance, when it starts to apply when someone starts wining after having lost a lot.

“But there is no right to bet in legislation and it would require the legislation to change. We recognise companies need to manage their risk and are entitled to choose their consumers just like other businesses pick their clients. We’re aware of the debate, but is it a priority for us? We have other priorities for the time being.”

Taking the initiative

But despite this lack of regulatory pressure, several of the UKs biggest bookmakers have recognised that MBLs can be shrewd business, and if executed correctly, can boost revenues, increase customer satisfaction, and provide a point of differentiation in a crowded market.

William Hill was the first major operator to make its move, launching a £1k guarantee for ITV-televised races back in April, before pledging to lay all bets on 90-minute World Cup markets to win £10k. Both guarantees kick in at 10am on the day of the event. Betfair then introduced a similar pledge, laying bets to win £500 on its sportsbook for all UK & Irish Class 1 and 2 races.

“We invest a lot of money in compiling and our trading function, and basically our traders wanted to lay their prices,” says Betfair’s head of trading Colm Sevastopulo. “They were fed up with hearing on Twitter how they were running scared, and if I’ve got three or four guys pricing up a race on a Saturday, its silly not to lay those prices.”

“We are trying to find a balance between catering to recreational customers – which the whole industry is doing –  and giving customers who want to bet more the opportunity to do so,” says William Hill’s group trading director Terry Pattinson.

“My firm and the industry in general probably tipped a bit too far over on the mass market side, so we said this MBL was going to be fairer for our whole base.

“I saw it down in Australia, and it didn’t ruin our business down there. We changed our strategies and it worked. It is a different environment and it’s not a given it will work here, but we thought we’d try it and its gone well so far.”

William Hill’s group trading director Terry Pattinson

In approximately 11 weeks since launching the racing MBL, Pattinson say Hills has taken an extra £5m in stakes, with the firm holding around 1.5% of that for a profit of £75k.

“It’s not going to move the dial but looking at all elements our business, it helps PR-wise and its marginal gains,” Pattinson says. “I’m not expecting to hold 8% on this business. Ideally I’d like to not lose on it, but I can’t be certain. That’s why its 1k not 10 at the minute. We’ve gone to £5k under the covers for the bigger races like the Guineas or the Derby, and if a customer beats me in a Grade 1, fair enough. I’m saying to the punters, have a go, and we’ll see who wins.”

Sevastopulo said he expects a relatively minimal uplift in revenues, but points out several benefits of the MBLs, starting with morale in the trading room. “These guys are traders, they want to lay their prices and take customers on,” he says. The guarantees also help Betfair re-establish itself as a bookmaker for sharp customers, in-line with the firm’s dual brand strategy.

Meeting in the middle

Of course there are compromises that have to be made for Hills to offer these limits. First of all customers who want to test them won’t be offered bet boosts, and may not receive promos like Best Odds Guaranteed, or 2 Clear. Likewise, the prevalence of bots and arbers means the firm will rarely go above Betfair, although Pattinson says he is still willing to take a stand on occasion.

“We are a big firm with a great compiling team and I’ve got guys who can give me opinions,” Pattinson says. “If I want to go above Betfair, I’ll do it but we will pick and choose our battles. The main time this hurts is when the machine dips quickly and you didn’t want to be above it, but you’re stuck there at 7/1 when you can lay 6/1 for plenty on the machine. It’s a catch 22. If you as a customer want to get on that, you’ll get restricted, but if you’re a real customer and want our price, we’ll lay it.”

The early ‘trial balloon’ guarantees have also been successful over at Betfair, where the firm extended it to a £3k guarantee on The Open golf championship, saying it had been “really pleased with the response to the racing guarantee”.

Likewise at Hills, the current offers are “just the start of the journey”.

“I’m trying to steer us back into a fairer direction for the industry and for William Hill,” Pattinson claims. He says the operator expects to lay 90-minute football bets to win up to £5k on the top five European leagues this upcoming season, with golf majors also getting some sort of guarantee.

“We’re trying to build a sustainable business for the future, and this is all part of getting our product ready for today and tomorrow,” he adds.

Teething problems

But that’s not to say the transition to MBLs have been all plain sailing. Both Hills and Betfair had some initial problems where customers were knocked back, in part down to some human error in putting the right limits into the systems, and informing customer services of the offer, and in part thanks to some flaws in the system.

Pattinson also says Hills has been losing money on the each-way part of guaranteed racing bets, and would like to update the internal systems so the win part of the bet is approved automatically, while the each way part could be referred to a trader if it mechanically favours the punter.

There are also some lessons to be learned from Black Type, who made a £500 MBL across all main markets a key part of its identity upon launch. The firm kept it up for around a year before dropping the concession. Part of the problem was the arbers and bonus abusers, but it also became a “double edged sword” for turnover, according to Black Type’s head of media, David Preece.

“It is great that punters know they can get a guaranteed bet but they then assume that’s all they can get on” he says. “Which has a limiting effect both on turnover and customer experience.”

Preece adds: “A bet to win guarantee does have a place but only if it’s widely accepted by a number of bookmakers and if it’s done on the right markets and races. Today [Monday], for example with Ripon and Ayr and the lower grade meetings you can’t really endorse it.  But for big racing festivals and major sporting events punters should be accommodated in large size – there is no reason not too when the markets are well established.”

Sevastopulo also points out that Hill and Betfair are able to offer these guarantees because they have a big trading room and have invested in compilers and traders. “Not every firm has that budget, and if you’ve got a third party doing most of your trading, then naturally you’re going to use restrictions more,” he says.

Punters for their part have not been universally in favour of MBLs with some arguing you will simply get more bots and a resulting sharpening of terms and markets, with punters ending up with less not more.

One well-known gamekeeper turned poacher said on Twitter: “The bots will take all the prices the pros and semi-pros want anyway, once they’re allowed to win a monkey rather than a tenner. People who say ‘it works in Australia’have never traded in the UK. How many bots are opening with Aussie firms on a daily basis relative to UK?”

How a wider rollout of MBLs affects the betting ecosystem remains to be seen, but for operators, not offering big limits on major events may be unnecessarily cutting of some revenue streams. Because as Hills has proven, there are marginal gains to be made in these highly liquid events. As Preece puts it, there simply aren’t that many customers who are going to be big winners in these markets in the long term. “If there really were that many winning customers, the industry wouldn’t be thriving as it clearly is,” he says. Maybe a few more firms should be taking after William Hill and Betfair and taking the punters on.